Cannabis-industry investors are likely overestimating the odds for federal decriminalization - Michael King

Cannabis-industry investors ‘are likely overestimating the odds for federal decriminalization,’ analyst says

SAFE Banking Act seen as marijuana-related bill that’s most likely to pass Democratic-run U.S. Senate in the next 2 years.

While cannabis stocks have soared this week after Democratic wins in Georgia’s runoffs put that party in control of the U.S. Senate, one analyst has warned the rally looks overdone.

“Investors in cannabis producers, including Tilray (TLRY), Canopy Growth (CGC), and Aurora Cannabis (ACB), are likely overestimating the odds for federal decriminalization and descheduling along the lines of the Marijuana Opportunity, Reinvestment, and Expungement (MORE) Act that passed last month in the House,” said Beacon Policy Advisors analyst Charlotte Jenkins in a note Thursday.

“Passage of the MORE Act is unlikely even in a Democratic-controlled Senate because there is likely not enough Republican support to reach the requisite 60 votes to pass the MORE Act or Schumer’s similar legislation,” she added, referring to Democratic Sen. Chuck Schumer of New York, who is set to become the chamber’s majority leader.

The Senate’s filibuster rule requires 60 votes to end debate on most items and allows the minority party to stymie the majority’s efforts. With the Democratic victories in Georgia, the party will have 50 seats in the 100-seat chamber and only get control of it because a Democratic vice president, Kamala Harris, will cast tiebreaking votes.

Related: Maverick moderates the big winners in a divided U.S. Senate

And see: Democrats win Georgia’s runoff elections, giving their party control of U.S. Senate

Others who are tracking the prospects of cannabis-related legislation also are highlighting how getting to 60 votes would be key.

“The federal decriminalization of marijuana certainly becomes more likely with Democrats in control of the Senate, though any major legislation would need 60 votes in the upper chamber to avoid a filibuster,” said Michael King, co-founder and CEO of a California-based cannabis company, Kings Garden, in a statement.

Tilray TLRY, 6.29% has gained 40% this week, while Canopy Growth CGC, 5.04% WEED, 6.38% is up 24% and Aurora Cannabis ACB, 3.85% ACB, 5.13% also has jumped 24%.

The Cannabis ETF THCX, 4.43% has advanced 21% for the week, the ETFMG Alternative Harvest ETF MJ, 3.50% has added 18%, and Cronos Group CRON, 7.20% CRON, 8.63% has climbed 29%.